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Why Platinum ETF ‘PPLT’ is Poised for More Upside

This article was originally published on ETFTrends.com.

Among precious metals and the related exchange traded funds, gold usually gets the most headlines and last year, palladium join the party with an epic yearly performance. This year, commodities investors may do well to remember platinum and the Aberdeen Standard Physical Platinum Shares (PPLT) .

Coming off a rough 2018, PPLT is modestly higher to start 2019. On the demand side, platinum will continue to enjoy robust industrial demand. Additionally, platinum jewelry is starting to enjoy a jump in demand as well, especially among the Millennial generation – younger generations in traditional gold-centric economies like India saw 2017 platinum jewelry sales jump 25%, according to Platinum Guild International.

Some market observers see platinum as potentially offering upside in 2019.

“Nic Johnson, Pimco’s managing director and portfolio manager for commodities, says he prefers the metal over gold. Used in autocatalysts of diesel engines and jewelry, it’s near the cheapest ever relative to both bullion and palladium, after tumbling 14 percent last year,” reports Bloomberg.

Platinum Power for Investors

Gold ETFs are among the largest commodities ETFs and as a result, those funds usually see the most activity in the commodities space, a theme that often comes at the expense of less followed metals such as platinum.

“While investors have poured into gold funds, they’ve deserted platinum, which has fallen out of favor amid shrinking demand and excess supply. The possibility the trend reverses even slightly represents a buying opportunity, Johnson said in an interview from Newport Beach, California,” according to Bloomberg.

Historically, platinum prices have exhibited a strong correlation the South African rand currency – as the ZAR appreciates, the higher costs of production and lower U.S.-dollar-denominated platinum prices would put pressure on miners, causing slowdowns in production.

“Platinum was the weakest of the four major precious metals last year as environmental concerns reduce demand for diesel-powered automobiles. By contrast, equity market turmoil and an increasingly dovish Federal Reserve have supported gold and silver, while palladium has benefited from its use in vehicles that run on gasoline,” reports Bloomberg.

For more information on the metals market, visit our precious metals category.

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